The Economics of Scarcity

I'm new to this group and in all honesty joined as much for the discussion with thoughtful, discerning individuals as the concept itself. I hope to share some ideas and insight and gain some as well. Challenging one another is what makes us grow so I hope you'll both challenge me and welcome the challenges I present. So I'll get right to it. I watched the Rob Hokpins video and spent some time checking out a good portion of this sight. While I completely agree with the fact that we are going to need to change our lifestyles in the face of peak oil I have a concern I'd love to hear responses to. As I understand it, this Transition is proposing we shift our culture as it exists today to one that is not reliant on fossil fuels but instead uses sustainable energy, local food sources, etc. to make for a more "resilient" community. However, as long as we still operate within a profit based monetary system there will always be scarcity, for scarcity (or perceived scarcity) is the single best friend of profit. So what's to motivate any company, be it a clean energy company, a local farm, etc. to actually try to make human basic needs (housing, energy, food, water) abundant? History has shown that the opposite has always been true in a profit system; the bottom line is, no pun intended, the bottom line. Profit ALWAYS comes before social concern in a profit system, ALWAYS. Hence Problems & Scarcity = Profit. It seems that while Transition is working for a great cause, it is actually treating a symptom, not the root problem. Is this acceptable and is every member of this group ok with that? Or am I missing something entirely? I'd love to hear feedback.

Replies to This Discussion

A most interesting and enjoyable discussion. I have several things to add this morning. First let me say that my earlier post emphasized the negative aspects of profit too much. It is not profit per say that is a problem since profit is just a measure of an aspect of the system. It is really the underlying design of the system and what has been targeted for measurement as profit. In the present capitalistic free market system it is excess monetary capital as measured by profit that is considered valuable and desirable. If the system design were such that what we measured as profit was human happiness or well being we would have a very different outcome from the system.

I have always viewed capitalism as essentially an efficiency machine that strives to improve the efficiency of the creation of certain elements of its design without regard for other things. If the things that capitalism is striving to be efficient about are making our lives happier, more fulfilling and healthier great we are much better off. On the other hand if the things that capitalism is attempting to maximize efficiently are making our lives hard and miserable then we are worse off. It is not the fault of capitalism per se but the design of the rules of our particular form of capitalism.

The old saying in industrial management is that what you measure you get more of and better at. What you don’t measure suffers. Our system measures monetary capital and we continue to get more of it at the cost of happiness and well being for many of the people in the world.

This leads me to my second piece of input. A design problem that we are currently suffering with has to do with energy and the value of high grade energy. Because of the easy availability of high grade energy in the form of fossil fuels and because the rules of the system were not set up to measure or value it’s high gradeness, we have implemented an industrial system based on the idea that high grade energy is very inexpensive and easily available. This is a problem.

To put in into perspective lets talk about energy in human terms. A person is capable of the average output of energy over a reasonable period of time of about 200 watts of power. Therefore for five hours of manual work a person can generate a kilowatt hour worth of power to do useful work. The current price of a kilowatt hour worth of high grade electrical power is about ten cents. On an energy basis your hard work is worth 20 cents for a 10 hour day or 2 cents per hour. Our current minimum wage for manual labor is about $7 per hour or 350 times the value of the energy. I see this as a sign that we have lost sight of the value of high grade energy in terms of how we value human labor. This is a design flaw in our system and has encouraged us to wastefully use a great deal of high grade energy.

Human brain power is great at finding nifty ways of upgrading low quality energy and efficiently using energy to achieve improvements in the quality of life for humans. If our system had been designed to appreciate the value of high quality energy the ratio of the monetary value of human labor and high quality energy would not be as large as it is now. This could have produced a very different looking system.

This brings me back to Ehan’s comments from the Zeitgeist Orientation Guide, which I did review. From a technical perspective, as an engineer, I believe that the desired outcome of the Zeitgeist organization is in a sense possible. It is in a sense possible to have a world stuffed full of happy well taken care of people. If our system valued high quality energy in more realistic human terms and we therefore appreciated the value of human labor and compensated people equitably for their inputs to the system we would have a chance at achieving the Zeitgeist utopia. However that is not the current system. The current system has some serious design flaws such that we have lost all sight of the value of human input and pay and reward people all out of proportion to their energy value. Further the design of the system does not measure and therefore value the things that are really important to health and happiness.

Until we are ready for a major system redesign we are in trouble. My real concern for Ethan’s vision from the Zeitgeist material is that by the time humans are truly ready for change it is likely that we will have squandered so much of the easily available high quality energy that nature supplied us it may be very difficult to implement the Zeitgeist vision.